Smt. Sarnala Jayalaxmi, Hyderabad V. ACIT, Central Circle - 6 , Hyderabad

ITA 1329/HYD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6346 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 21-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 18-07-2014
• Court: TRIBUNAL
• Department Lawyers: A SEETHARAMA RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Search and seizure; Document seized; Assessment record; Documents seized
• Section: 143(3); 153A; 148; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1329/HYD/2014 ASSESSMENT YEAR: 2004-05 SMT. SARNALA JAYALAXMI, HYDERABAD [PAN: AGQPS4023B] VS ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-6, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO, AR FOR REVENUE : SHRI A. SEETHARAMA RAO, DR DATE OF HEARING : 13-07-2016 DATE OF PRONOUNCEMENT : 10-08-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-III, HYDERABAD DATED 17-04-2014. ASSESSEE HAS PREFERRED THE FOLLOWING GR OUNDS IN HER APPEAL: 1. THE LD. CIT(A) - III, HYDERABAD ERRED BOTH IN L AW AND ON FACTS IN DISMISSING THE APPEAL. I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 2 -: 2. THE LD. CIT(A) - III, HYDERABAD OUGHT TO HAVE AN NULLED THE ORDER OF THE ASSESSING OFFICER PROPERLY APPRECIATING THAT THE ACTION TAKEN BY AO IN INITIATING PROCEEDINGS U/S. 153C IS BAD IN LAW. 3. THE LD. CIT(A)-III, HYDERABAD OUGHT TO HAVE APPR ECIATED THE FACT THAT AT THE TIME OF SEARCH, NO INCRIMINATING MATERI ALS HAS BEEN FOUND JUSTIFYING THE ADDITIONS SO MADE. 4. THE LD. CIT(A)-III, HYDERABAD OUGHT TO HAVE APPR ECIATED THE DECISION OF THE ITAT, MUMBAI SPECIAL BENCH IN THE C ASE OF M/S. ALL CARGO GLOBAL LOGISTICS LTD., VS. DCIT, CENTRAL CIRC LE 44, MUMBAI AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. CIT (A)-III, HYDERABAD ERRED IN SUSTAINI NG THE ADDITION TOWARDS UNDISCLOSED PROFIT FOR RS. 5,27,500/- IGNOR ING THE EXPENDITURE INCURRED BY THE APPELLANT TOWARDS DEVEL OPMENT OF LAND. 6. THE LD. CIT (A)-III, HYDERABAD OUGHT TO HAVE DEL ETED THE ADDITION OF RS. 5,27,500/- PROPERLY APPRECIATING THE EVIDENC E FURNISHED BY THE APPELLANT IN THE PAPER BOOK IN THE FORM OF CONF IRMATION LETTERS FROM VARIOUS PARTIES AND THE COPY OF THE BANK STATE MENT THROUGH WHICH THE PAYMENT IS MADE. 7. THE LD. CIT (A)-III, HYDERABAD OUGHT TO HAVE DIR ECTED THE AO TO DROP PENALTY PROCEEDINGS U/S. 271(1)( C) OF THE ACT APPRECIATING THE FACT THAT THE APPELLANT COMPANY HAS NEITHER CONCEAL ED ANY INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. 8. THE APPELLANT HEREIN MAY ADD, ALTER OR MODIFY OR SUBSTITUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BE FORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. IN ADDITION TO QUESTIONING THE PROCEEDINGS U/S. 1 53C OF THE INCOME TAX ACT [ACT], ASSESSEE HAS RAISED ADDITION AL GROUNDS AS UNDER: A DDITIONAL GROUNDS OF APPEAL 9. THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 153C OF THE ACT FOR THE ASSESSMENT YEAR 2004.05, THERE BEING NO SATISFACTIO N RECORDED BY HIM AS WELL AS BY THE ASSESSING OFFICER HAVING JURI SDICTION OVER THE COMPANY SEARCHED. I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 3 -: 10. THE LD. C1T(A) OUGHT TO HAVE ANNULLED THE ORDER OF THE ASSESSING OFFICER APPRECIATING THAT INVOKING OF THE PROVISIONS U/S 153C WITHOUT RECORDING SATISFACTION BY HIM AS WELL AS BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEAR CHED PARTY BECOMES INVALID AS HELD BY THE HON'BLE A.P HIGH COU RT IN THE CASE OF CIT VS. M/S SHETTYS PHARMACEUTICALS & BIOLOGICALS L TD IN ITTA NOS.662 OF 2014 DATED.26-1L-2014. 11. THE LD. C1T(A) OUGHT TO HAVE APPRECIATED THAT T HE MATERIAL FOUND IN PREMISES OF M/S. MADHUCON PROJECTS LTD. DO ES NOT BELONG TO APPELLANT FOR THE YEAR UNDER CONSIDERATION AND THAT THE PROCEEDING U/S 153C CANNOT BE INITIATED. CASE LAW: DR. N.PAWAN KUMAR VS. DCIT [ITA NOS.1568 & 1569/HYD/2013]. 12. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FA CT THAT NO ADDITION CAN BE MADE TO THE INCOME OF THE ASSESSEE WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING THE C OURSE OF SEARCH WHILE FRAMING ASSESSMENT U/S 143(3) RWS 153C OF THE ACT. 3. IN SUPPORT OF THE ADDITIONAL GROUNDS, LD. COUNSEL PLACED ON RECORD THE ORDER SHEET, WHEREIN THE SATISFAC TION WAS RECORDED AS UNDER: ORDER SHEET SMT. SARNALA JAYALAKSHMI PAN NO: AGQPS4023B SEARCH & SEIZURE OPERATIONS U/S. 132 OF IT ACT WAS CONDUCTED IN THE CASE OF M/S. SARNALA SRIDHIR GROUP OF CASES. A S PER THE APPRAISAL REPORT, THE ASSESSEE IS COVERED U/S. 153C OF THE IT ACT. HENCE NOTICE U/S. 153C IS PUTUP. SD/- 10/8/06 4. IT WAS SUBMITTED THAT THE ORDER SHEET AS RECORDED ABO VE IS SIMILAR TO THE ORDER SHEET RECORDED IN THE CASE OF M /S. SHETTYS PHARMACEUTICALS AND BIOLOGICALS LTD., WHICH WAS DECID ED BY THE I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 4 -: HONBLE ITAT AND WAS UPHELD BY THE HONBLE HIGH COUR T OF AP IN ITTA NO. 662/2014 DT. 26-11-2014 [57 TAXMANN.COM 282 ]. 5. LD. DR SUBMITTED THAT THE ORDER SHEET PLACED ON RECO RD IS AS PER THE ASSESSMENT RECORD OBTAINED BY HIM. 6. ON CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE DOCUMENTS PLACED ON RECORD, WE ARE OF THE OPINION THAT THE PROCEEDINGS INITIATED AGAINST ASSESSEE U/S. 153C ARE NOT AS PER THE PROVISIONS OF THE ACT. 6.1. SECTION 153A IS PROCEDURAL SECTION WHICH DEALS WITH THE MODE OF ASSESSMENT. A NOTICE U/S. 153A CAN ONLY BE I SSUED TO SUCH PERSON WHERE A SEARCH IS INITIATED U/S.132 OR BO OKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIO NED U/S. 132A AFTER 31ST DAY OF MAY, 2003, REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE, RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FOLLOWING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEV ANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUIS ITIONED IS MADE. THEREAFTER ASSESSMENT WOULD BE FRAMED AS PER TH E PROVISIONS OF SECTION 143. SECTION 153C DEALS WITH THE SITUATION WHERE THE AO IS SATISFIED THAT ANY MONEY, BULLION, JEWE LLERY OR OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNT O R DOCUMENTS SEIZED OR REQUISITIONS BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF A CCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE H ANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT THE AO SHALL PROCEED AGAINST EACH OF SUCH OTHER PERSON A ND ISSUE SUCH I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 5 -: OTHER PERSON NOTICE AND ASSESS OR RE-ASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 15 3A; MEANING THEREBY THAT ACTION UNDER SECTION 153C ALWAYS DEPENDS UP ON THE ACTION U/S.153A UPON SOME OTHER PERSON. THE AO OF SUC H PERSON IN WHOSE CASE SEARCH WAS CONDUCTED IS SATISFIED THAT TH E MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THIN GS OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG T O SOME OTHER PERSON, HE AFTER FORMING THE BELIEF TO THAT EXTENT REGA RDING THE SAME SHALL HAND OVER THE RELEVANT MATERIAL TO THE CONCE RNED AO HAVING JURISDICTION OVER SUCH OTHER PERSON. 6.2. BEFORE INITIATING PROCEEDINGS U/S.153C, THE AO, WHO HAS INITIATED PROCEEDINGS FOR COMPLETION OF ASSESSMEN T U/S.153A SHOULD BE SATISFIED THAT THERE IS INCRIMINATING MATERIAL BELONGING TO ASSESSEE. THUS, IN CONTRAST TO THE PROVISIONS OF SEC TION 148 WHERE RECORDING A REASON IN WRITING ARE SINE QUA NON, U/S.153C THE EXISTENCE OF COGENT AND DEMONSTRATIVE MATERIAL IS GERM ANE TO THE AOS SATISFACTION IN CONCLUDING THAT THE SEIZED DOCUME NTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON FOR INITIA TION OF ACTION U/S.153C. THE BARE READING OF THE PROVISION OF SECTIO N 153C INDICATES THAT THE SATISFACTION NOTE COULD BE PREPARED BY THE AO EITHER AT THE TIME OF INITIATING PROCEEDINGS FOR COMPLETI ON OF ASSESSMENT OF A SEARCHED PERSON U/S.153A OR DURING THE STAGE OF THE ASSESSMENT PROCEEDINGS. THE SATISFACTION NOTE COUL D BE PREPARED AT EITHER OF THE FOLLOWING STAGES: (A) AT THE TIME OF OR ALONG WITH INITIATION OF PROCEEDI NGS AGAINST THE SEARCHED PERSON U/S.153A; (B) ALONG WITH THE ASSESSMENT PROCEEDINGS U/S.153A; I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 6 -: (C) IMMEDIATELY AFTER THE ASSESSMENT PROCEEDINGS ARE COMPLETED U/S. 153A OF THE SEARCHED PERSON; 6.3. THUS, THE CONDITION PRECEDENT FOR ISSUING NOTIC E UNDER SECTION 153C AND ASSESSING OR RE-ASSESSING INCOME OF SUCH OTHER PERSON IS THAT, THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THINS OR BOOKS OF ACCOUNT OR DOCUMENTS SE IZED OR REQUISITIONED SHOULD BELONG TO SUCH OTHER PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED RECOURSE CANNOT BE MADE TO THE PROVISIONS OF SECTION 153C. THUS, THE PROVISIONS CON TAINED U/S. 153C CAN ONLY BE INVOKED WHERE THERE WAS SATISFACTION BY THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED OR REQUI SITIONED U/S.132A DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE PROCEEDINGS U/S.153A ALWAYS PRECEDE THE PROCEEDIN GS U/S.153C AND WITHOUT RECORDING SATISFACTION NOTE BY THE A O INITIATING PROCEEDINGS FOR COMPLETION OF ASSESSMENT U/ S. 153A CANNOT BE PROCEEDED U/S.153C IN THE CASE OF SUCH OTH ER PERSON NOT SEARCHED. 6.4. THE MAIN DIFFERENCE IN THE LANGUAGE IS THAT IN SECTION 158BD THE SCOPE OF JURISDICTION OF AO IS ONLY WITH R ESPECT TO THE UNDISCLOSED INCOME FOUND DURING THE COURSE OF SEARCH , WHEREAS IN SECTION 153C THE SCOPE OF JURISDICTION OF THE AO IS WIT H RESPECT TO ANY MONEY, BULLION, JEWELLERY, OTHER VALUABLE ARTICLE S OR THINGS OR BOOKS OF ACCOUNT OR DOCUMENTS WITH RESPECT TO WHICH THE AO IS SATISFIED THAT IT BELONGS TO SUCH OTHER PERSON. BUT SO F AR AS THE REFERENCE TO WORD 'SATISFACTION' IS MADE, IT IS SAME A S AVAILABLE IN SECTION 158BD. THEREFORE, THE RATIO LAID DOWN IN VARIO US CASES IN RESPECT TO THE POINT OF SATISFACTION WILL APPLY FOR INITI ATION OF ACTION I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 7 -: U/S.153C. IN VIEW OF THIS, INITIATION OF PROCEEDINGS U/S.153C IS NOT PROPER AS THERE IS NO SATISFACTION RECORDED BY THE AO HAVING JURISDICTION OVER THE PERSON SEARCHED OR REQUISITIONE D U/S.132A DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF SEARC HED PARTY OR LATER BEFORE ISSUE OF NOTICE U/S.153C. ACCORDINGLY, THE ASSESSMENT FRAMED U/S.153C IN THE ASSESSMENT YEAR HAS TO BE QUASH ED. 7. SIMILAR FACTS EXIST IN THE CASE OF M/S. SHETTYS PHARMACEUTICALS AND BIOLOGICALS LTD., (SUPRA), WHEREI N CO-ORDINATE BENCH OF ITAT HAS CONSIDERED THAT, WHERE THERE IS NO S ATISFACTION RECORDED BY ASSESSEE ON SEARCHED PERSON, INITIATION OF PROCEEDINGS AGAINST THE OTHER PERSON U/S. 153 WOULD BE BAD. REVEN UE HAS CARRIED THE MATTER TO THE HONBLE HIGH COURT OF AP IN I TTA NO. 662/14. ON WHICH HONBLE HIGH COURT HAS ANALYSED THE PROVISIONS AND CONSIDERED AS UNDER: THE ARGUMENT APPARENTLY IS VERY ATTRACTIVE, BUT TH E LAW IS OTHERWISE AND THE LEARNED TRIBUNAL HAS CORRECTLY AP PLIED. WE THEREFORE APPROPRIATELY SET OUT SECTION 153C OF THE ACT. ASSESSMENT OF INCOME OF ANY OTHER PERSON 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1.')3, WH ERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS S EIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASS ETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NO TICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDAN CE WITH THE PROVISIONS OF SECT ION 153A, IF, THAT ASSESSING OFFICER IS SAT ISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIO NED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB- SECTIO N (1) OF SECTION 153A. I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 8 -: (EMPHASIS SUPPLIED) IT IS THEREFORE CLEAR THAT FIRS TLY SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER WHO CONDUCT ED SEARCH, THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A O F THE ACT. THEREAFTER, THE ASSESSING OFFICER HAVING JURISDICTION OVER THIRD PA RTY ON RECEIPT OF THE SEIZED MATERIAL OR BOOKS OF ACCOUNTS OR DOCUMENT BE ING HANDED OVER TO HIM SHALL RECORD HIS OWN SATISFACTION AFTER EXAMINI NG THE SAME INDEPENDENTLY WITHOUT BEING INFLUENCED BY THE SATIS FACTION OF THE SEIZING OFFICER. IN OTHER WORDS IT IS NOT AN AUTOMATIC ACTI ON. WE FIND SATISFACTION OF TWO OFFICERS IS MISSING. IN THIS CONNECTION WE SET OUT THE TEXT OF THE ORDER OF THE ASSESSING OFFICER WHICH IS AS FOLLOWS. A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CARRIED OUT IN THE GROUP CASE OF DR. T. YADHAIAH GOUD AND OTHERS ON 25.3.2010. DURING THE C OURSE OF SEARCH OPERATION DOCUMENTS BELONGING TO SHETTY PHARMACEUTICALS & BIO LOGICAL LTD., HAS BEEN SEIZED. HENCE IT IS CONSIDERED TO IN ITIATE PROCEEDING U/S. 153C OF THE I.T.ACT. THE AFORESAID SECTION MANDATES RECORDING OF SATISFA CTION OF THE ASSESSING OFFICER(S) IS A PRE-CONDITION FOR INVOKIN G JURISDICTION AND IT IS NOT A MERE FORMALITY BECAUSE RECORDING OF SATISFACTION POSTULATES APPLICATION OF MIND CONSCIOUSLY AS THE DOCUMENTS SEIZED MUST BE BELONGING TO THE ANY OTHER PERSON OTHER THAN THE PERSON REFERRED TO IN S ECTION 153-A OF THE ACT. IT IS CONTENDED THAT THE SAME ASSESSING OFFICER IS INVOLVED IN THE MATTER. THIS FACT DOES NOT DISPENSE WITH ABOVE REQUIREMENT. IT IS SETTLED POSITION OF LAW THAT WHEN A THING IS TO BE DONE IN ONE PARTICUL AR MANNER UNDER LAW THIS HAS TO BE DONE IN THAT MANNER ALONE AND NOT OT HER WAY (SEE NAZIR AHMED V. KIND EMPEROR). WE THINK THE LEARNED TRIBU NAL HAS CORRECTLY FOLLOWED THE PRINCIPLE. WE DO NOT FIND ANY ELEMENT OF LAW TO BE DECIDED. 8. SIMILAR VIEW IS ALSO TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF PEPSICO INDIA HOLDINGS (P.) LTD. , [50 TAXMANN.COM 299] (DELHI) WHEREIN ON THE FOLLOWING FA CTS, IT WAS HELD AS UNDER: A SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) WAS CONDUCTED ON THE JAIPURIA GROUP DURING WHICH CERTAIN DOCUMENS BELONGING TO THE PETITIONER WERE FOUND. CONSEQUENTLY, THE ASSESSING OFFICER OF THE JAIPURIA GROUP PREPARED A SATISFACTION NOTE TO THE EFFECT THAT THE DOCUMENT S MENTIONED I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 9 -: THEREIN BELONGED TO THE PETITIONER. THREE KINDS OF DOCUMENTS WERE MENTIONED IN SATISFACTION NOTE. FIRST WERE THE PHO TOCOPIES OF CUMULATIVE REDEEMABLE PREFERENCE SHARES PURCHASED B Y THE PETITIONER FROM TDL AND SMV. THE SECOND SET OF DOC UMENTS WERE UNSIGNED CHEQUES FOUND IN THE CHEQUE BOOKS OF THE J AIPURIA GROUP COMPANIES, WHICH HAD BEEN WRITTEN IN FAVOUR OF THE PETITIONER. THE THIRD DOCUMENT WAS A PHOTOCOPY OF A SUPPLY AND LOAN AGREEMENT MADE BETWEEN PDL AND PETITIONER. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICES TO THE PETITIONER UNDER SECTION 153C SEEKING TO REOPEN THE ASSESSMENT S OF THE PETITIONER FOR THE ASSESSMENT YEARS 2006-07 TO 2011 -12 AND TO FOLLOW THE PROCEDURE PRESCRIBED UNDER SECTION 153A. IN RESPONSE TO THE SAID NOTICES, THE PETITIONER SUB MITTED ITS OBJECTIONS WHICH WERE REJECTED BY THE ASSESSING OFF ICER AND THE PETITIONER WAS DIRECTED TO COMPLY WITH THE ASSESSME NT PROCEEDINGS UNDER SECTION 153C. ON WRIT: HELD IN ORDER THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON COMES TO THE SATISFACTION THAT DOCUMENTS OR MATERIALS FOUND DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEARCHED P ERSON, IT IS NECESSARY THAT HE ARRIVES AT THE SATISFACTION THAT THE SAID DOCUMENTS OR MATERIALS DO NOT BELONG TO THE SEARCHE D PERSON. IN THE INSTANT CASE, IT IS NOBODY'S CASE THAT THE J AIPURIA GROUP HAD DISCLAIMED THOSE DOCUMENTS AS BELONGING TO THEM. UN LESS AND UNTIL IT IS ESTABLISHED THAT THE DOCUMENTS DO NOT BELONG TO THE SEARCHED PERSON, THE PROVISIONS OF SECTION 153C DO NOT GET A TTRACTED BECAUSE THE VERY EXPRESSION USED IN SECTION 153C IS THAT 'W HERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERS ON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A .... ' IN VIEW O F THIS PHRASE, IT IS NECESSARY THAT BEFORE THE PROVISIONS OF SECTION 153 C CAN BE INVOKED, THE ASSESSING OFFICER OF THE SEARCHED PERS ON MUST BE SATISFIED THAT THE SEIZED MATERIAL (WHICH INCLUDES DOCUMENTS) DOES NOT BELONG TO THE PERSON REFERRED TO IN SECTION 153 A, I.E., THE SEARCHED PERSON. IN THE SATISFACTION NOTE, WHICH IS THE SUBJECT- MATTER OF THESE WRIT PETITIONS, THERE IS NOTHING TH EREIN TO INDICATE THAT THE SEIZED DOCUMENTS DO NOT BELONG TO THE JAIP URIA GROUP. THIS I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 10 -: IS EVEN APART FROM THE FACT THAT THERE IS NO DISCLA IMER ON THE PART OF THE JAIPURIA GROUP INSOFAR AS THESE DOCUMENTS ARE C ONCERNED. SECONDLY, THE FINDING OF PHOTOCOPIES IN THE POSSESS ION OF A SEARCHED PERSON DOES NOT NECESSARILY MEAN AND IMPLY THAT THE Y 'BELONG' TO THE PERSON WHO HOLDS THE ORIGINALS. POSSESSION OF D OCUMENTS, AND POSSESSION OF PHOTOCOPIES OF DOCUMENTS ARE TWO SEPA RATE THINGS. WHILE THE JAIPURIA GROUP MAY BE THE OWNER OF THE PH OTOCOPIES OF THE DOCUMENTS, IT IS QUITE POSSIBLE THAT THE ORIGINALS MAY BE OWNED BY SOME OTHER PERSON. UNLESS IT IS ESTABLISHED THAT TH E DOCUMENTS IN QUESTION, WHETHER THEY BE PHOTOCOPIES OR ORIGINALS, DO NOT BELONG TO THE SEARCHED PERSON, THE QUESTION OF INVOKING SECTI ON 153C DOES NOT ARISE. THIRDLY, THE ASSESSING OFFICERS SHOULD NOT CONFUSE THE EXPRESSION 'BELONGS TO' WITH THE EXPRESSIONS 'RELATES TO' OR ' REFERS TO'. A REGISTERED SALE DEED, FOR EXAMPLE, 'BELONGS TO' THE PURCHASER OF THE PROPERTY ALTHOUGH IT OBVIOUSLY 'RELATES TO' OR 'REF ERS TO' THE VENDOR. IN THIS EXAMPLE IF THE PURCHASER'S, PREMISES ARE SEARC HED AND THE REGISTERED SALE DEED IS SEIZED, IT CANNOT BE SAID T HAT IT 'BELONGS TO' THE VENDOR JUST BECAUSE HIS NAME IS MENTIONED IN TH E DOCUMENT. IN THE CONVERSE CASE IF THE VENDOR'S PREMISES ARE SEAR CHED AND A COPY OF THE SALE DEED IS SEIZED, IT CANNOT BE SAID THAT THE SAID COPY 'BELONGS TO' THE PURCHASER JUST BECAUSE IT REFERS T O HIM AND HE (THE PURCHASER) HOLDS THE ORIGINAL SALE DEED. IN THIS LI GHT, IT IS OBVIOUS THAT NONE OF THE THREE SETS OF DOCUMENTS - COPIES O F PREFERENCE SHARES, UNSIGNED LEAVES OF CHEQUE BOOKS AND THE COP Y OF THE SUPPLY AND LOAN AGREEMENT - CAN BE SAID TO 'BELONG TO' THE PETITIONER. IN VIEW OF THE FOREGOING DISCUSSION, THE INGREDIENT S OF SECTION 153C HAVE NOT BEEN SATISFIED IN THIS CASE. CONSEQUENTLY, THE NOTICES ISSUED UNDER SECTION 153C ARE QUASHED. ACCORDINGLY, ALL PROCEEDINGS PURSUANT THERETO STAND QUASHED. 9. AS CAN BE SEEN FROM THE SATISFACTION RECORDED BY THE AO WHILE INITIATING PROCEEDINGS U/S. 153C, THERE IS NEITH ER ANY LINKING UP OF THE DOCUMENTS NOR ANY FINDING THAT CERTAIN SEIZED DOCUMENTS PERTAIN TO ASSESSEE. MOREOVER, AO ALSO HAS NOT RECORD ED ANY SATISFACTION WHILE INITIATING PROCEEDINGS U/S. 153C. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THERE IS NO SATISFACTION RE CORDED BY THE AO, AS REQUIRED UNDER THE PROVISIONS. I.T.A. NO. 1329/HYD/2014 SMT. SARNALA JAYALAXMI :- 11 -: 9.1. CONSEQUENTLY, THE PROCEEDINGS U/S. 153C ARE NOT AS PER THE PROVISIONS OF THE LAW. FOLLOWING THE PRINCIPLES L AID DOWN ON THIS ISSUE AND ON THE FACTS OF THE CASE, WE UPHOLD THE A DDITIONAL GROUNDS RAISED. WE, ACCORDINGLY HOLD THAT THE PROCEED INGS INITIATED U/S. 153C ARE BAD IN LAW. SINCE THE VERY PR OCEEDINGS ARE HELD TO BE BAD IN LAW, THERE IS NO NEED TO ADJUDICATE ALL OTHER GROUNDS RAISED ON MERITS. HOWEVER, THEY ARE ALSO CON SIDERED ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH AUGUST, 2016 SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 10 TH AUGUST, 2016 TNMM COPY TO : 1. SMT. SARNALA JAYALAXMI, HYDERABAD. C/O. P. MURAL I & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -6, HYDERABAD. 3. CIT (APPEALS)-III, HYDERABAD. 4. CIT-II, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.